I do this all the time in Pro Tools for sound design & delay effects - allows much more creativity. If Steinberg are worried about users creating feedback loops leave it as is in Elements etc. - just allow it in Cubase Pro & Nuendo.
None of channels can send into itself. Making such in FX will break consistency.
I made an experiment and I found out that you can not send FX 2 to FX 1 if FX 1 have already sent a signal to FX 2. That’s a real bummer and not obvious behavior.
This scenario can make a lot of troubles with the feedback though.
But it is an interesting request.
If memory servers me correctly you could do this at one point, but it was many versions ago. So if this was changed on purpose to protect users then I’m not so sure it’ll be back.
Can you route out/in of analog though for the time being?
There has been a long debate about this, and the decision was made to not allow feedback loops throughout the audio engine.
Allowing feedback loops for the FX channels will also open up other possible problems/mistakes which could result in total disaster like blown speakers and hearing loss. So it is very unlikely that Steinberg will come back to this decision.